9911796707
TMI Blog2012 (5) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... been assigned by the Assessing Officer - order is not in error - decided against the assessee. - WRIT TAX No. - 282 of 2012 - - - Dated:- 2-4-2012 - Ashok Bhushan, Prakash Krishna, JJ. Petitioner Counsel :- S.K. Garg,Ashish Bansal Respondent Counsel :- C.S.C., Income Tax,Ashok Kumar (Delivered by Prakash Krishna, J.) Petitioner, a public limited company, is engaged in the business of manufacture of crystal sugar and sale thereof. It is also engaged in the business of manufacture and sale of industrial alcohol manufactured from molasses. In addition, it has been carrying on the business of generation of power, partly meant for own consumption. By means of the present writ petition which arises out of the proceedings under the Income Tax Act, the petitioner has questioned the legality and validity of the approval order dated 28th December, 2011 (Annexure-2 to the writ petition) passed by the Commissioner of Income Tax (Central), respondent no.1 herein, under section 142 (2A) of the Income Tax Act. The background facts may be noticed in brief. The dispute pertains to the Assessment Year 2009-2010. The petitioner filed its income tax return discl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer before passing of the prior approval order under section 142 (2A) of the Act. The Assessing Officer resorted to the aforesaid provision only when he came to the conclusion that from the account books, it is not possible to work out the actual income of the petitioner company due to its complexity. He further submitted that the matter was discussed by the Assessing Officer with the petitioner company on various dates as recorded in the order sheet and only then an opinion was formed by the Assessing Officer to appoint special auditor due to complex nature of the account books. Considered the respective submissions of the learned counsel for the parties and perused the record. Taking first point first, the contention of learned counsel for the petitioner is that "a reasonable opportunity of being heard" which is the sine qua non for exercise of power under section 142 (2A) of the Act was not afforded to the petitioner by the Commissioner of Income Tax, respondent no.1. It was submitted that the respondent no.1 could not have granted exparte approval without allowing the petitioner an opportunity of being heard and thus the order has been passed in gross violation of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee who is an affected person. On plain language of proviso to section 142 (2A) a reasonable opportunity of hearing is required to be given by the Assessing Officer. A notice dated 11.12.2011 was issued to the petitioner fixing 23.12.2011 for appearance. On that date, the authorized representative of the petitioner did appear and sought adjournment and the matter was adjourned to 26.12.2011 on which date the petitioner filed reply to the show cause notice which was considered by the Assessing Officer. He found that the accounts of the petitioner are complex in nature and he forwarded a proposal for invoking the provisions of section 142 (2A) of the Act vide his letter addressed to the Commissioner of Income Tax (Central) dated 26th of December, 2011. The Commissioner of Income Tax, the respondent no.1, in his order dated 28th of December, 2011 impugned in the present writ petition has considered the reply of the petitioner as also the show cause dated 19th of December, 2011. Its bare perusal would show that the respondent no.1 took into consideration the relevant facts and the material on record and it cannot be said that he committed any illegality in granting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... generation division of the company has been made during the year. The quantum of power imported from Madhyanchal Vidyut Vitaran Nigam Ltd. is 1595520 KW during the period of financial year 2008-09 whereas as per information received from UPPCL, Lucknow the quantum of electricity consumed by Sugar Mill from UPPCL is only 148560 KW. Copy of details received from UPPCL is enclosed for your ready reference. It may be seen on comparison that quantum of electricity is hugely inconsistent. Secondly, from the details furnished by you on 23.11.2011, it is found that power of the value of Rs.3,52,46,909/- was sold to Madhyanchal Vidyut Vitaran Nigam Ltd. (UPPCL). Whereas as per the information received from UPPCL, Lucknow, total consideration due to you for power sold to UPPCL is Rs.3,93,90,698/- (copy enclosed). Thus, it is seen that there is huge difference in the amount of consideration as per your reply as compared to the information received from UPPCL. It may further be informed that as per quantitative details of items of raw material, finished goods and bye-products of Co-gen Division furnished by you as per annexure "N" of your reply dated 16.08.2011, the quantum of electricity sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y effect on capacity expansion of the power plant. As regards 2nd issue, a detailed explanation has already been filed which appears to have not been considered while issuing show cause notice under reply. From a perusal of the explanation dated 19.12.2011 it will be seen that all the figures stand fully reconciled and there remains no discrepancy whatsoever, what to say of complexity." The contents of point no. 1 of the notice as reproduced above would show that the assessee has furnished different details at different points with regard to the quantum of power generated, quantum of power consumed by it and quantum of balance power exported to Mandhyanchal Vidyut Vitran Nigam Limited, quantum of the power purchased from the UPPCL in addition to the power consumed out of the said generation. The Assessing Officer has noticed that in the last financial year 2007-2008 the power generation was 3,18,18,000 Kilo Watts. In the financial year 2008-2009 a production of 2,29,20,000 KW has been disclosed. There is shortage in the power production in spite of the fact that there has been addition by way of new plant and machinery in the power generation Division of the Company during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts" and "the interests of the revenue" are the prerequisites for exercise of power under Section 142 (2A) of the Act. Undoubtedly, the object behind enacting the said provision is to assist the Assessing Officer in framing a correct and proper assessment based on the accounts maintained by the assessee and when he finds the accounts of the assessee to be complex, in order to protect the interests of the revenue, recourse to the said provision can be had. The word "complexity" used in Section 142 (2A) is not defined or explained in the Act. As observed in Swadeshi Cotton Mills Co. Ltd. Vs. C.I.T. , it is a nebulous word. Its dictionary meaning is: "The state or quality of being intricate or complex or that is difficult to understand. However, all that is difficult to understand should not be regarded as complex. What is complex to one may be simple to another. It depends upon one's level of understanding or comprehension. Sometimes, what appears to be complex on the face of it, may not be really so if one tries to understand it carefully." Thus, before dubbing the accounts to be complex or difficult to understand, there has to be a genuine and honest attempt on the part of the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unexplained discrepancies in the account books and the reply given by the petitioner as also the information received from the Mandhyanchal Vidyut Vitran Nigam Limited and UPPCL. The Assessing Officer first tried to clear the doubts by calling replies and he resorted to Section 142 (2A) thereafter, he found that it is difficult to work out the real income of the assessee due to complex nature of the entries in the account books. It is one thing to say that the account books may be rejected and the best judgement assessment may be resorted to under section 144 of the Act. But even then, best judgement cannot be arbitrary or whimsical. There has to be some basis for it. Cogent and valid reasons have been assigned by the Assessing Officer and by the respondent no.1 as well while granting the permission for special audit and we see no good ground to take a different view of the matter. In view of the above, the contention of the learned counsel for the petitioner that the account books are not complex on the facts and circumstances of the case, has got no merit and the same is hereby rejected. In nutshell we do not find that the order directing the special audit suffers fro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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